scotia bank of costa rica (San José)

Is Scotiabank de Costa Rica S.A. on the verge of collapse?

On December Protected content Rica Star reported that in July of Protected content "Banco Latinoamericano de Comercio Exterior, S.A. (“Bladex” or “the Bank”; NYSE: BLX) announced the recent closing of a US$125 million, dual tranche (2 years and 3 years), senior unsecured amortizing term loan facility in favor of Scotiabank de Costa Rica S.A. " The funds were necessary to cover operating expenses of the Scotiabank subsidiary here in Costa Rica. The local bank has enjoyed an amount of success in Costa Rica due to the name recognition resulting from Scotiabank of Canada's expansion efforts in 55 countries worldwide.

Unfortunately Scotiabank's recent expansion into the area of unsecured credit (credit cards and auto loans) and subsidiaries in high risk markets, like Costa Rica, has changed the reputation of Scotiabank from a secure savings institution "Bank of No Surprises" to negative outlooks by ratings organizations (November 9, Protected content News report).

Since Costa Rica has only recently begun to establish credit ratings of consumers, the risk to Scotiabank de Costa Rica (SBCR) investor's is considerably higher than to those in North America. Moody's and Dominions outlook ratings for Scotiabank are negative. And, In August Protected content took rating actions against SBCR. In other news, Scotiabank was told to improve money-laundering controls at N.Y. branch in November of Protected content .

I have found Scotiabank de Costa Rica to be misleading in their Certificate of Deposit (CD) interest payments. Perhaps this is a cost cutting technique o help pull SBCR out of its financial deficit. I have SBCR CDs that pay under the amount stated on the document and was told that SBCR intends to make up the under-payment at the close of the 5 year note. And, unlike the 9 other Costa Rica financial institutions in which I have CD's, SBCR holds back paying interest any time the due date is a weekend or holiday. In a period of 5 months they have withheld interest for 7 days.

Scotiabank de Costa Rica has suffered from a reputation of poor customer service in some areas. Tim Lytle reported in The Real Costa
Rica Blog August 5, Protected content anti-North American attitude in the Escazu branch. The author has not experienced that in the Grecia branch, but has found the employees incompetent and the explanations about bank policies to be unintelligible. Because SBCR (Scotiabank de Costa Rica policies are effecting interest payments of certificates of deposit I have attempted to have the management explain the rational only to discover that I was given incorrect information upon investing in the certificates and that the staff and management do not have good product knowledge and are unable to calculate interest.

The Central Bank of Costa Rica is in charge of establishing banking policy. It is then up to the SUGEF (the General Supervisory Agency of Finance) to enforce compliance with Central Bank policies. All banks (both public and private) are subject to the policies dictated by the Banco Central de Costa Rica.